The Central Bank of Nigeria’s Monetary Policy Committee has increased the benchmark lending rate by 0.5% to 26.75%, Governor Olayemi Cardoso announced at the end of the 296th MPC meeting in Abuja on Tuesday.
This marks the latest move in the committee’s efforts to combat inflation, which has seen rates rise by over 500 basis points since the start of the year.
Meanwhile, the previous rate hike in May brought the rate to 26.25%, but with June’s inflation rate climbing to 34.19% according to the National Bureau of Statistics, the committee has taken further action to address the rising cost of living.
On a year-on-year basis, the headline inflation rate was 11.40 per cent points higher than that of June 2023 (22.79 per cent).
Also, on a month-on-month basis, the headline inflation rate in June 2024 was 2.31 per cent, which was 0.17 per cent higher than the rate recorded in May 2024 (2.14 per cent) meaning that the rate of increase in the average price level was higher in June than in May.
Repeatedly, the CBN governor has maintained that the MPC members were committed to price stability and were willing to keep tightening until inflation is tamed.
Multiple reports from investment houses had projected that the MPR would be hiked,
Cowry Asset Management, in its weekly report, projected a 25bps to 50bps hike in interest rates, while the Meristem report anticipates “a 100 basis point increase in the monetary policy rate to 27.25 per cent while likely keeping other parameters unchanged. Overall, we anticipate that the committee will prioritize inflation control and capital inflow sustainability, crucial for maintaining a stable exchange rate system, and accordingly, implement a rate hike to achieve these objectives.”
